What is the Energy Price Cap?
On February 3rd 2022, Ofgem announced that the Price Cap was to increase from 1st April 2022 due to record increases in global gas prices. The increase will see the cap rise by a staggering 54%, meaning Energy Suppliers can increase their maximum prices by the same amount.
Ofgem originally introduced the price cap in a bid to stop Energy Suppliers making excessive profits. This is a way to protect the customer from aggressive price increases negatively affecting their energy bills. However, the most recent increase has resulted from wholesale gas shortages around the globe affecting the energy suppliers ability to meet demand. The 54% increase has been introduced to pass on some of the increased costs affecting the suppliers.
Does it Apply to Businesses?
Whilst this is good news (in part) for residential customers, the same cannot be said for businesses.
The energy price cap is a tool used by Ofgem to protect the consumer, not businesses. Energy Suppliers are now passing on their costs to businesses by increasing their business gas and business electricity costs. Some businesses have received quotes exceeding a staggering 70p/kWh, making operations extremely challenging.
Business Energy Claims have been contacted by a number of businesses that have become unstuck by the new quotes that will effectively close the doors of their business as a result.
Are Brokers still making a profit?
With the market moving radically over the last few months, determining if you are getting a good deal has become very difficult to identify. Due to the uncertainty, Energy Brokers are still able to hide considerable commissions within standing charges and unit rates without the knowledge of the business. At such a difficult time for businesses, this is only adding fuel to the fire.
How do I know if I am Getting a Good Rate?
As always, the best advice is to shop around. Using comparison sites, going direct to the supplier, and using an energy broker or two is always a good idea. The more information you have about the market, the better position you are to negotiate.
It is also important to ask the Energy Broker outright how much commission have you built into the contract. This will give you a good idea of how much above market rate you are paying, and will give you the advantage in a negotiation. If they do not tell you the commission amount in your contracts, you may be able to make a claim.